Milbank LLP has achieved an arbitration victory for the developers and owners of a 148.5 MW wind farm in northeast Mexico against a subsidiary of the Spanish conglomerate Abengoa. In the award issued last summer, the Arbitral Tribunal ruled that Abengoa had breached its obligations as general contractor for the construction of the wind farm. Last week, the United States District Court for the Southern District of New York confirmed the award in favor of Milbank’s clients, which awarded liquidated damages, attorneys’ fees and arbitration costs.
The dispute arose from two agreements entered into in 2014 for Abengoa de México SA de CV, as general contractor, to provide construction services for the 45-turbine wind farm in the coastal state of Tamaulipas in Mexico. In the course of performing work under these agreements, Abengoa failed to meet critical project milestones and did not pay amounts it owed to its subcontractors and damages due under the contracts. Due to various defaults by Abengoa under the construction contracts, Eólica Tres Mesas SA de CV and Eólica Tres Mesas 2 SA de CV (together, “Eólica“), the owners of the wind farm, terminated the agreements for cause.
After the termination, Abengoa commenced arbitration in October 2016, seeking nearly US$28 million in damages for alleged contractual violations by Eólica. Milbank filed a counter-memorial denying Abengoa’s claims and asserted counterclaims on Eólica’s behalf. The case was seated in New York and governed by New York law, with the hearing held at Arbitration Place in Toronto.
The award by the three-arbitrator tribunal vindicated the positions the Milbank team had advanced in the arbitration on behalf of Eólica. The tribunal rejected all claims for breach of contract that Abengoa had advanced against Eólica and agreed that the contracts had been properly terminated due to Abengoa’s defaults and failures to perform. The tribunal ruled in favor of Eólica on its counterclaims for all liquidated damages due under the contracts and also awarded Eólica attorneys’ fees and arbitration costs. The US District Court for the Southern District of New York confirmed the award on February 28, 2019, finding that none of the enumerated grounds for setting aside an award under the Federal Arbitration Act were present. The arbitration was conducted under the auspices of International Arbitration Rules of the AAA International Centre for Dispute Resolution by a tribunal composed of J. William Rowley QC, Oscar M. Garibaldi and Alejandro Ogarrio Ramirez España.
The Milbank team included partners Allan Marks (Global Project, Energy & Infrastructure Finance), Michael Nolan and Mark Scarsi (Litigation and Arbitration), associates Kamel Aitelaj, Alexandra Achamallah (Litigation and Arbitration) and Miguel Duran (Global Project, Energy & Infrastructure Finance), and litigation support specialists Grace Green and Jim McGuire. Co-counsel with Milbank was Mexico City-based Malpica, Iturbe, Buj y Paredes law firm, including partners Rodrigo Buj García and Rolando Zárate Guzmán.
